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Paperless currency, is there a case for implementation?

We wrote already two relevant articles on the subject. In every case, when the articles published, in news sites or linked through general interest sites, the shock of the “radical” change needed appeared to overwhelm a part of the non-familiar with the subject readers, resulting in an avalanche of queries regarding its implementation challenges. The trend was dissimilar with the one we encountered from our regular readers.

It became apparent that the degree ofanalysis required on a subject is equivalent to its expected benefits.

We write this blog in compliance with this otherwise profound conclusion.

Our regular readers will be aware of why one the major propositions within the Gaianomy framework is the introduction of paperless currencies. For those that the concept is unknown, as a parenthesis, we present briefly some of the potential socioeconomic benefits of a paperless currency system.

Eliminates tax evasion (Only in Europe it can ease the taxpayers burden by €1.96 T yearly!)

Eliminate practically overnight government corruption and officials’ briberies (current corruption statistics suggest that more then 90% of transactions are made in cash)

Reduce drastically money driven street crime (if all money is digital only objects can be stolen which again cannot be exchange for cash)

Reduce within 5 years from its introduction the drug trade by at least 80%. 5 years is the maximum time before the privately owned in any country gold stock, that is practically the only other means of exchange beyond hard currency for drugs, will be depleted. Simultaneously with drugs becoming less on the street by the day, all drug related anti-social behaviour would diminish rapidly (see global statistics on drugs related crime) with the effect reaching some of the route causes of civil wars (see Mexico, Afghanistan etc.)

Eliminate the fear of counterfeit money

Eliminates all the black markets (at least the 93%)

Impact positively on gang cultures as the loss of their operational capital will reduce their attractiveness as alternative to work options

Create the conditions to stop illegal economic migration between countries (barter in kind is not enough to sustain illegal migration and no trafficker will accept barter as his remuneration)

Eliminate bank robberies

Reduce the jails population by at least 35%

Reduce reoffending ratios in relation to non-violence crime that are primarily of financial nature

Interrupt terrorist group financing channels

Stop poaching (Black markets will find it very hard to operate by reverting to other then cash)

Last but not least, the links between enterprises, organisations, political parties, public servants and individuals with vested interest in the continuation of the existence of black markets, illegal trade, human trafficking, drug trade, weapons trade, It will immediately be unveiled. It will be easy after that to know whom not to vote in the next election.

You will have to agree, that it is an impressive catalogue of benefits, which societies may ignore to their peril. We see no apparent reason why any government will refuse to implement it. Especially if one considers all the additional positive side effects, the application might have, like: reduction in policing needs, money production and distribution, reuse of the cash handling human resources to more productive economic sectors, the inevitable reintroduction into the economy the proceeds of previous illegal activities, the long term health benefits of the country’s population, the reduction in health spending etc.

Of course as every change in societal level, one must manage such an undertaking carefully and in a socially sensitive way. Based on the feedback we received the major of the challenges identified were:

If one country only, implements the paperless currency how can they stop other currencies from “over-spilling” through its borders?

Will the cost of policing, the implementation, will exceed the benefits?

What will happen with the tourists?

How technophobic and elderly will adjust?

How the less educated will avoid overspending?

How one may address fraud in its usual forms?

How the banks will react to the additional stress on their systems and services from the additional amount of transactions?

In case of the county’s communications networks going down, how transactions can continue?

What the implementation cost will be?

How a country should avoid phenomenon of people hiding their currency during the transition period, which will feed later on the black markets once more?

Does it need constitutional changes?

In case of a country, like Greece that is a part of the EU does it need EU approval?

Lets take them one a at a time.

“Over spilling”: The ways to, illegally, import currency are known and involve mainly smuggling either through the customs or through the borders. In the case of the European Union where boarders do not really exist and people can transfer with them any amount of money without any checks.

To counter the risks a country ought to: (a) introduce a comprehensive law where all risks are addressed and for all possible bridging attempts, the law enforcement units have a “weapon” (b) transfer all fiscal benefits from the implementation of the system to the people in order to transform them into guardians of the institution (c) introduce punishments severe enough to be respected (d) offer sufficient rewards for compliance and uncovering illegal transactions (e) offer at the points of entry an easy to use and effective system of transferring currencies into paperless forms either by prepaid debit cards or by links to direct debit facilities or mobile solutions without additional cost to the bearer.

We calculated that a period of 5 years would be enough to reach a compliance level exceeding 93%.

Cost of policing the implementation: As already mentioned above, one should design the system in a way that society owns responsibility for its diachronic success. No level of policing can substitute that. Hence, our proposition seeks the people’s endorsement primarily and its government bodies secondary. In support to the societal “neighbourhood watch” one should add, of course, intelligent controls into people’s transactions whereby “broken” trails, amounts they cannot be justified, within the country and outside of it, are flagged.

What will happen with the tourists: We covered this in the two previous replies

How technophobic and elderly will adjust: Technophobia is one of the manifestations of resistance to change. As Habermas would put it interest drives actions. What we are proposing as a resolution, and feel free to add to it, is to counteract resistance through benefits and ease of use. We know for example that the fear of being mugged is higher than the fear of pressing a button on your mobile or typing a pin or placing your finger on a sensor. There are so many user-friendly technologies today that the probability of a nation finding no solution to cover the need of this niche group is remote

How the less educated will avoid overspending: Well this one is simple. In every transaction, the system can give them the remaining available credit similarly, to what today the cash dispensers are able to do.

How one may address fraud in its usual forms: Well this is a very large subject. Fraud will always exist but this time it has just one option to be electronic. This however is a backdrop for the fraudsters as every transaction will be recorded and traceable. We analysed all of the “usual suspects” and in every case we found a way to counteract it. We look forward to suggestions from you for cases where someone may get hold of your money without leaving a trail.

How the banks will react: We believe extremely positively. You see, for the banks collecting the taxes, on behalf of the state, and paid for it, is not something we see them objecting to. The states on the other hand have more then enough benefit from the reduction of personnel needed, the immediate collection of the VAT and the benefits deriving from the counteracting of systematic tax evasion that willingly will pay enough to compensate the banks. Finally, the potential stress on their systems and services from the additional amount of transactions is not even an issue for modern technology.

If the county’s communications networks going down: The probability of this happening to a wider region due to the inherited redundancy of today’s communication networks is negligible and in any case one will be equally able to utilise the mobile network infrastructure or any other wireless network for that reason. Al technologies for this to happen are both existing and mature.

What the implementation cost will be: According to our calculations, anything between $35 to $350 per transaction point, which is negligible and can be, possibly, financed by the participating banks and the mobile operators.

People hiding their currency during the transition period: We expect phenomena of this type to appear, however diachronically as all research in the field of institutions suggests will disappear. We see as being part of the 3 to 7% inefficiency we predict in the system, but definitely more research may be needed. Bottom line is we do not really see this as an issue if all measures described above are in place.

Does it need constitutional changes: None in the team is a constitutional-law expert. As a matter of interest, we tested the proposition’s compliance against the Greek constitution and we found no evidence of the opposite

In case of a country, like Greece that is a part of the EU does it need EU approval? There is no prior experience, due to the novel nature of the idea, but knowing the way EU operates we think that the answer should be yes. Will they oppose? We very much doubt it. Will they delay an implementation attempt, most probably? Nevertheless, we definitely believe they will succumb to the propositions strong arguments eventually.

I couldn’t agree more!
I already, since November 2011, try to promote the idea of non-paper money.
I add the continuation of coin using, that can serve all above benefits plus an easiness in everyday life.
Please see all at http://bponline.amcham.gr/?p=2099 and at gobanknoteless.wordpress.com.

I am sorry for the delayed comment. I have great news for all. Instead of just arguing/debating our case we went one step further and created the means of implementing this vision (allow a week and then have a look at http://www.sonicesonice.com or https://memeplex.es of our facebook page memeplexes).
What we have achieved is to create a software-less and hardware-less method for any business,person etc. of accepting credit( debit and prepaid) cards through the use of any smartphone and a multi-functional patented form of bi-directional prepaid that can make this proposition a reality.
We welcome anyone wishing to spread the word.